Monday, June 5, 2017

The Ownership of and Issues with the ColecoVision Trademark

Courtesy of Wikipedia

A few blog entries ago, I described the current state of the ColecoVision. http://nerdlypleasures.blogspot.com/2017/03/old-coleco-or-new-coleco-nostalgia-or.html In that blog entry, I identified Coleco Holdings, LLC, a subsidiary of Dormitus Brands and previously River West Brands as the claimant of the trademark to the ColecoVision name. Given certain recent interactions between Coleco Holdings and certain ColecoVision homebrew developers, I believe it is worth exploring Coleco Holdings' trademark claims in some detail.

First, let me begin by summarizing the recent news which has caused interest in this topic, then go on to describe how a trademark is registered and finally the law and facts surrounding the ColecoVision trademark.

The reason for this examination is because Coleco Holdings recently filed DMCA takedown notices against a Facebook ColecoVision fanpage called, rather prosaically, ColecoVision Fan, It can be found here : https://www.facebook.com/colecovisionfan/ Officially Coleco Holdings directed the takedown notices against images of a pair of pornographic games, Strip Poker and BustIn-Out, made by a prolific homebrew developer named Daniel Bienvenu, However, according to various posters on AtariAge, they also issued takedown notices against other images of games from most of the other major ColecoVision homebrew developers.

But before anyone works up righteous indignation for the "little guys" against the "evil empire", I would note that every image taken down, http://atariage.com/forums/topic/265739-coleco-strong-arming-homebrew-publishers-and-fan-sites/?p=3764888, consisted exclusively or primarily of pirated games. Even though they may have been flagged for trademark infringement, they were undoubtedly illegal as copyright infringement. Small companies like OpCode Games and CollectorVision do not have the rights to make homebrew ports or MSX-to-Coleco conversions of Galaga, Pac-Man, Space Invaders or Bosconian. Coleco Holdings seems unusually proactive in enforcing the rights of others. It would undoubtedly claim that it is protecting itself from trademark disparagement or tarnishment by attacking images of pirated games which prominently feature the ColecoVision logo.

However, Coleco Holdings itself is not above using the copyrighted and trademarked images of others without authorization to promote itself :

Courtesy of Coleco Holdings

Coleco Holdings does not hold the rights to Frogger (Konami), Donkey Kong (Nintendo) or Cabbage Patch Kids (Original Appalachian Artworks). The old Coleco made products around each of those franchises, but the new Coleco cannot without authorization. The above logo is being used in connection with an Expo to be held in August of this year.

An Overview of Coleco Holdings' ColecoVision Trademark Claim

In the United States, trademarks can be registered with the United States Patent and Trademark office. Trademark registration grants a few important advantages. First, a registered trademark is presumed valid in court. Second, you can sue someone for infringing a registered trademark in the United States District Court. But unregistered as well as registered trademarks also enjoy the protection of state laws.

With patents, the first inventor to file a patent for an invention will enjoy protection even if the inventor was not the first to discover the invention. But with trademarks, the first person to use the mark in commerce in good faith will have priority over others who later use it. Hydro-Dynamics, Inc. v. George Putnam & Co., 811 F.2d 1470, 1472 (Fed. Cir. 1987). "Use in commerce" is defined in the Lanham Act as “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” 15 U.S.C. § 1127

At the USPTO, the applicant can file for trademark protection based on either actual use or a bona fide intent to use. If filing under the intent to use, he must file a statement of use showing actual use of the mark in commerce within six months of the notice of allowance application. The USPTO can grant up to five extensions of time to file the statement of use, for six months each. In other words, the statement of use must be filed within 36 months after the USPTO has given notice that it has allowed the trademark.

On December 9, 2003, River West Brands, LLC filed an application to register a trademark in the ColecoVision name. ColecoVision had been previously registered by Coleco Industries, Inc., the actual makers of the ColecoVision in 1984 but the trademark was cancelled in 1991. The trademark was allowed on January 3, 2006, Reg # 3490101. The allowance triggered RWB's requirement to show actual use of the mark in commerce. It obtained four extensions of time to file a statement of use, and during that time assigned the mark to Coleco Holdings, LLC. On July 1, 2008, Coleco Holdings filed a Statement of Use and a photograph of the specimen product it intended to show as use in commerce :

Now, have you ever come across a ColecoVision portable in the ordinary course of trade or commerce? I sure have not. However, if you search for "ColecoVision Portable", you will very quickly be brought to the website of the redoubtable Benjamin Heckendorn. "Ben Heck" is a largely self-taught engineer who first obtained notoriety for building hacking home consoles like the Atari 2600 into portable consoles. By no small coincidence, his ColecoVision portable looks identical to the one Coleco Holdings showed to the USPTO. In fact the photograph with the hand can be found here : http://www.benheck.com/colecovision-portable/

Issues with Coleco Holdings Trademark Claim

Now, if you could obtain a trademark by pointing to anyone's use of a mark, then you could unscruptously reap the rewards of another individual's economic risk. So, Coleco Holdings has a problem unless they can show that Ben Heck's use of the mark was authorized by them under license. I do not know if Ben Heck sought "official approval" when he made his portable or was financed by Coleco Holdings. But Coleco Holdings has a bigger problem, namely the mark's use in the ordinary course of trade or commerce. Ben Heck's creations are one-of-a-kind and he does not sell everything he makes. Sometimes he does so for charity or as part of a contest drawing and I believe he may have done so for his ColecoVision portable. His portables call for the sacrifice of original systems, so the number of portable ColecoVisions which could be produced in this manner would be very small in any event.

In certain circumstances, the single use of a mark can qualify as use in commerce, but there must be a bona fide intent to continue using the mark. Mendes v. New England Duplicating Co., 94 F. Supp. 558 (D. Mass. 1950). Coleco Holdings would point to its subsequent history with the Flashback to show a good faith intent to continue to use the ColecoVision mark. Between Ben Heck's 2005-2006 portable and the 2014 ColecoVision Flashback, I am not aware of any other Coleco Holdings (or its predecessor's) authorized products bearing the ColecoVision name.

A trademark can be abandoned "when its use has been discontinued with intent not to resume. Intent not to resume may be inferred from circumstances." 15 U.S.C. § 1127, and thus becomes canceled. 15 U.S.C. § 1064. Nonuse for two consecutive years is prima facie evidence of abandonment. 15 U.S.C. § 1127. In this context, "prima facie" evidence means that the burden is shifted to the trademark claimant to show that it has not abandoned the trademark. Societe De Dev. Et D'Innovations Des Marches Agricoles Et Alimentaires-Sodima-Union De Coop. Agricoles v. Int’l Yogurt Co., 662 F. Supp. 839, 845 (D. Or. 1987).

Moreover, in 1989 Congress amended the Lanham Act to add the requirement that the trademark be used in the "ordinary course of trade", which places a single sale, Custom Vehicles, Inc. v. Forest River, Inc., 476 F.3d 481, 485-86 (7th Cir. 2007), or sporadic sales over the course of several years insufficient to rise to the level of continuous use. Harod v. Sage Prods., 188 F. Supp. 2d 1369, 1378 (S.D. Ga. 2002). There can be exceptions, such as when the purchase price is high and the product has prominent publicity with the target market, such as a single sale of $634,000 of rifles and attachments to the U.S. Military which were supplied for a two-year period. FN Herstal, S.A. v. Clyde Armory, Inc., No. 3:12-CV-102 (CAR), 2015 U.S. Dist. LEXIS 4310, at *27-29 (M.D. Ga. Jan. 8, 2015).

Trademarks are not intended to encourage "warehousing". Warehousing, in this context, is filing an application with the effect to reserve a name without having any concrete plans to put the name to a commercial product and often accompanied by very broad descriptions on the trademark application as to which types of products the name or mark would apply. Int’l Yogurt Co., 662 F. Supp. at 851-52. Given the extremely questionable initial use of the mark, Ben Heck's ColecoVision portable, followed by years of lack of any further use until the ColecoVision Flashback, a court may very well find that Coleco Holdings and its predecessor RWB tried to warehouse a mark.

Another issue with the ColecoVision trademark is that Coleco Holdings was not the first to use the trademark subsequent to Coleco Industries cancellation. Homebrew ColecoVision games have been in existence since Kevin Hortin published Kevtris in 1996. A list of known Coleco homebrew games is here : http://cvaddict.com/list.php?filter=3 That list gives sixteen cartridge games available before 2004. The boxes of many of these games use the ColecoVision rainbow logo or the styled ColecoVision typeface, suggesting that they are authorized products. (Coleco Holdings and its predecessors have not claimed any of the distinctive logos in their trademark filings). Prior users can have priority over a registered trademark holder in their region, but as these homebrew games were sold almost exclusively online, their region is the Internet. SeeNagrom Corp. v. Cock 'n Bull, Inc., 149 F. Supp. 217, 218 (D.D.C. 1957) ("The geographical limitations of the protection must be as broad as the requirements of the circumstances of the particular case.") Federal trademarks require use in interstate commerce, and the Internet has been recognized as an instrumentality driving interstate commerce. Am. Libraries Ass'n v. Pataki, 969 F. Supp. 160, 173 (S.D.N.Y. 1997). Ultimately the ColecoVision trademark may remain in public domain de facto so long as it is being regularly used for homebrew products by multiple publishers.

"In the most common type of suit for trademark infringement, the plaintiff complains that the defendant is passing off his (inferior) product as the plaintiff's. But here we have the converse case of "reverse passing off," in which the plaintiff complains that the defendant is trying to pass off the plaintiff's product as the defendant's . . . Why would anyone want to do such a thing? One reason might be to obliterate the plaintiff's corporate identity and prevent him from entering new markets, where the defendant, having appropriated the plaintiff's trademark, would claim that the plaintiff was the infringer. Such would be a case of deliberate reverse passing off, and HN1 terms like "passing off" and "reverse passing off" are sometimes reserved for deliberate efforts to confuse the consuming public, but either form of confusion can be actionable without proof of intent to confuse." [internal citations omitted].

Here, if Coleco Holdings has an inferior right to use the ColecoVision trademark compared to homebrew community, it may wish to nonetheless seek to block the homebrewers and claim that they were the infringers and lay claim to the general availability of ColecoVision trademark. The facts of Peaceable Planet may help illustrate the concept. Peaceable Planet made a plush toy camel called "Niles", a reference to the Nile Delta of Egypt. It sold a few thousand of these stuffed animals. Id. at 988. Ty, Inc., the makers of Beanie Babies, later sold a plush toy camel called "Niles" and its sales were in the millions. Id. The Court recognized that unfair competition may exist when a larger company tries to shut out a smaller company. Id. at 992. It also recognized that a smaller company like Peaceable Planet may unjustly may be perceived as manufacturing a pirate product. Id. at 993. The Court recognized that most consumers "would probably not care a whit" that an infringer may be selling pirate products, especially if the quality is identical to the lawful product. Id. at 993-94. It also acknowledged that highly ethical consumers may turn away from the pirate and his goods. Id. at 994. However, a claim for product disparagement or defamation cannot be made unless the junior user (Ty, Inc.) was responsible for creating the false impression that the senior user (Peaceable Planet) was a pirate. Id.

In 2014, Coleco Holdings filed a Declaration of Use and Incontestability, indicating that in the five years since 2008, it has continuously used the mark in commerce. The specimen this time was the ColecoVision Flashback. The ColecoVision Flashback was released in October of 2014, although it seems to have been announced in May of 2014. It is still being sold on the atgames website but otherwise seems discontinued. Even if Coleco Holdings was able to cure their initial defective period with a product from 2014, approximately 110 products had been released prior to it by homebrew publishers.

As I explained in my recent blog entry about HDMI licensing, there is probably little Coleco Holdings can do against a homebrew developer that makes an unlicensed game for the ColecoVision. The homebrew developer has a right to indicate in no uncertain terms the system for which its video game is intended to be used. The developer may at best have to forgo the old rainbow or stylized logos, which may draw too much attention, and may need to put a disclaimer indicating that the game is not licensed by Coleco Holdings, but that is about it. Disclaimers protect the most when they are prominent, not obscure or inconspicious, Pebble Beach Co. v. Tour 18 I, Ltd., 942 F. Supp. 1513, 1550-51, 1574 (S.D. Tex. 1996).

Other Related Trademarks

Coleco Holdings has also filed for a trademark for "ColecoVision Flashback", (Reg # 4682788) and in that their use is solid. That would not necessarily preclude someone else from manufacturing a "Super ColecoVision" or "ColecoVision 2.0" console which replicates all the functionality of the original Coleco plus the Super Game Module and some Coleco Adam capability and comes with a cartridge slot. There are no plans for a ColecoVision Flashback 2, so this trademark may fade away by 2019. Why pay unnecessary USPTO fees for a mark that is unlikely to be used again? Trademark registrations must be renewed every ten years.

Before we conclude this overview, what about the trademark "Coleco"? The original Coleco Industries filed for trademark protection for its name in 1961, but all the old trademarks associated with the old Coleco seemed to have been canceled by 2003 or early 2004. RWB filed many applications for trademarks for the Coleco name, only three are active. They cover clothing and shirts, (Reg # 3163343) hand-held electronic game units and battery operated and electric operated toys, (Reg # 4297747) and video game software and machines for use with television as well as providing information about electronic and video games via the internet (Reg # 3179722). RWB first applied for a trademark as related to video games in June of 2005.

It appears that in addition to the Coleco Sonic, a Sega Master System-emulating handheld, RWB also licensed more basic LCD handhelds under the "HeadtoHead" brand from 2005-2012 It would seem that these uses are legitimate, but only stretch to the handheld market. The old Coleco also made Head-to-Head games where two players could play on a single LED or LCD game. At least one of these units, the "Head to Head Plug n Play Video Game System" requires connecting to a TV. There were a few homebrew games that used the Coleco logo which were unassociated with RWB, in addition to a ColecoVision logo on their boxes prior to 2005.

Now Coleco Holdings could claim trademark dilution or a likelihood of confusion between its seemingly solid use of "Coleco" and others' unauthorized use of "ColecoVision." The two names share a common history and both are used in connection with video games. But there are differences here that may make such claims difficult or impossible to pursue.

Trademark dilution can result when a famous mark is used to promote products of questionable quality, this is called tarnishment. "Tarnishment is often found when the senior mark is placed in the context of sexual activity, obscenity or illegal activity." Kraft Foods Holdings, Inc. v. Helm, 205 F. Supp. 2d 942, 948 (N.D. Ill. 2002). However, Coleco is no longer a famous mark at the level of Coca-Cola, Kodak and Polaroid, Id. at 947, if it ever was, due to decades of inactivity and relative obscurity. Sullivan v. CBS Corp., Case Number: 00 C 5060, 2002 U.S. Dist. LEXIS 6625, at *25-27 (N.D. Ill. Apr. 8, 2002). It certainly is not at the level of Toyota's "Lexus" line of automobiles. Toyota Motor Sales, U.S.A., Inc. v. Profile Cocktail Lounge, Inc., Case Number: 99 C 5377, 2001 U.S. Dist. LEXIS 1393, at *7 (N.D. Ill. Feb. 8, 2001).

Each Federal Circuit uses a set of factors or a test for determining the likelihood of confusion. The tests tend to differ somewhat in terms of nomenclature and factors, but the results tend to be similar from Circuit to Circuit. As Coleco Holdings, LLC is an Illinois Limited Liability Company, I will use the seven-part test as adopted by the Seventh Circuit in Smith Fiberglass Prods. v. Ameron, Inc., 7 F.3d 1327, 1329 (7th Cir. 1993) :

(1) similarity between the marks in appearance and suggestion;

(2) similarity of the products;

(3) area and manner of concurrent use;

(4) degree of care likely to be exercised by consumers;

(5) strength of complainant's mark;

(6) actual confusion; and,

(7) intent of defendant "to palm-off his product as that of another."

(1) There is an obvious similarity between Coleco and ColecoVision. A sense of history is appropriate here. It is often the case that a company puts its name onto its video game consoles, "Atari VCS/2600/5200/7800", "ColecoVision", "Nintendo Entertainment System", "Sega Master System". "Coleco" is often used as a short-hand reference for the ColecoVision, in fact there is no other short way known to me that people refer to the console. However, Coleco did not have to name its console the ColecoVision, it could have named its console the "UltraVision" or the "MegaVision". Coleco Holdings can't escape the history from which it wishes to profit. So while this factor favors Coleco Holdings, it does not carry much weight given that the original Coleco made these choices.

(2) Up until 2017, there was some similarity of homebrew and Coleco Holdings products in that both played video games. But that is about it. Coleco Holdings, until just this year, https://www.colecoexpo.com/home/coleco-officially-releases-exidys-sydney-hunter-on-cartridge has never put its brand on a cartridge intended to be used any system, whether it was for the ColecoVision or the Nintendo DS or a young child-friendly console from VTech. Its licensees have manufactured standalone portable or home console games that cannot be reprogrammed. The ColecoVision is a programmable game console and has not been manufactured since 1985. People running homebrew cartridges on the old systems often have to face such issues as replacing failing DRAM chips, modding their system for composite output and addressing other failures and limitations of thirty year old technology. The homebrew cartridges do nothing on their own, unlike the new Coleco-branded products. This factor favors the homebrewers.

(3) Coleco Holdings and homebrewers both see their goods marketed on the Internet. Coleco Holdings has its products distributed in retail stores like Wal-Mart, whereas homebrews tend to be found at small retro video game stores and conventions. To the extent there is overlap, this factor favors Coleco.

(4) The consumers who are likely to purchase homebrews are a well-informed and sophisticated lot. They are aware that most of the classic console systems of the 1980s and 1990s systems had unlicensed games released for it during their lifetimes or subsequently. Purchasers of homebrew cartridges for the ColecoVision are highly likely aware of the history of the ColecoVision and not likely to care too much about whether a game is officially approved by the current trademark holder which has no substantial continuity with the original Coleco. Homebrews tend to be limited in quantity and most buyers will likely base their purchases on the strength of the game. This factor favors the homebrewers.

(5) The Coleco trademark is strong. Trademarks fall into one of five categories, fanciful (NVIDIA), arbitrary (Apple (Comptuer)), suggestive (Microsoft), descriptive and generic. The first three types of trademarks are afforded automatic protection, but descriptive marks are only afforded protection if they become associated with a particular product in some substantial portion of the consuming public's mind, acquiring secondary meaning (Rent-A-Center perhaps). Coleco originally stood for the "Connecticut Leather Company", but that name has no connection to video game products, making the mark at least arbitrary. Kadant, Inc. v. Seeley Mach., Inc., 244 F. Supp. 2d 19, 28 (N.D.N.Y. 2003). This factor favors Coleco.

(6) The evidence of actual confusion may vary somewhat from homebrew manufacturer to homebrew manufacturer, but absent any use of the "Coleco" logo without the "Vision", I would find it unlikely that any homebrew cartridge purchaser would likely be confused into thinking that the product was an authorized one just by using the ColecoVision brand alone. This factor favors the homebrewers.

(7) Intent of an individual is usually not subject to direct evidence, but reasonable inferences may be made to determine it. The obvious inference to be drawn from the use of the ColecoVision trademark is to inform the public which system the game will run on and attract the public's attention by replicating the classic packaging and logos. The use of "Coleco" is necessary but incidental to the use. The past history between the parties regarding the use of a name is a relevant consideration in determining intent. Rust Env't & Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1219 (7th Cir. 1997). Ultimately this factor favors the homebrewers.

In conclusion, I would suggest that it is unlikely that Coleco Holdings would be able to block homebrewers use of the ColecoVision trademark because it contains the trademark "Coleco" within it.

Update 06-07-17 : Ben Heck has graciously commented on this blog and on AtariAge. He indicates that he built the ColecoVision portable as a custom, one-off portable for a client and RWB came to him two years later proposing an agreement to authorize his use of its trademark. He agreed and allowed it to use his portable for promotional purposes, but did not know it was going to be used to to substantiate a trademark application. Obviously, this description is the very antithesis of "using a mark in the ordinary course of trade." The specimen RWB provided to the USPTO was misguided at best, disingenuous at worst. Between 2008 and 2014 I am unaware of any other use of by RWB or its successor of the ColecoVision trademark on a commercial product. That would seriously implicate the assertions in RWB's trademark application (or any application) that it had a bona fide intent to use the trademark in interstate commerce. Bona fide intent and good faith must be demonstrated by objective evidence, it must be more than a hope that the stars may align in some way that would make for a successful commercial use of the mark someday in the future. Caesars World, Inc. v. Milanian, 247 F. Supp. 2d 1171, 1191-92 (D. Nev. 2003). Even if a court would deem a use authorized two years subsequent to the fact as a valid use of the trademark, "token use is not enough, mere adoption of a mark without bona fide use, in an attempt to reserve it for the future, does not create trademark rights" Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1157 (9th Cir. 2001). Without a bona fide intent to use the mark in commerce at the time of the trademark application, the application is void ab initio (from the beginning). W. Brand Bobosky v. Adidas AG, 843 F. Supp. 2d 1134, 1140 (D. Or. 2011)

I thought you can't use DMCA takedowns for trademark infringements. And if you are going to use DMCA then you have to be the owner of the violated copyrights. Further someone making a bogus dmca takedown request could be liable for damages. Damages being compensation for the affected party's legal fees and time to straighten things out.

It does not appear that the takedown notice portion of the DMCA, 17 USC § 512, applies to other forms of intellectual property : patents, trademarks and trade secrets. Coleco Holdings indicated that the challenged content was infringing. Assuming for the sake of argument that it was infringing, what authorization did Coleco Holdings have from the copyright owners to act on their behalf as required by 17 USC § 512(3)A)(i)? The current copyright holders of these games presumably are companies like Konami, Bandai Namco and Square Enix. I would find it unlikely that they gave their permission to a small company like Coleco Holdings to act as a voluntary copyright enforcement agent. If not, the takedown notice would be invalid.

But before anyone gets excited at the prospect of having Coleco Holdings shell out for their damages and attorney's fees, one needs to read 17 USC § 512(f), "Misrepresentations", very carefully. Subsection (f) will award damages and attorney's fees to the alleged infringer if "Any person who knowingly materially misrepresents under this section--(1) that material or activity is infringing". Here Coleco Holdings may be correct that the material is infringing, but they had no authority to issue a takedown notice. It might be difficult to present a theory of actual damages to a court for misuse under these circumstances, and attorney's fees may not be available. The best course for the alleged infringer would be to point out the flaw in the notice to the service provider and hopes it restores the infringing material.

I built my one-off Coleco portable in December 2005. You can see my archived page here: https://web.archive.org/web/20051231232605/http://benheck.com:80/

In March 2008 River West Brands contacted me about "authorizing my use of their trademark". Basically coming to an agreement (posthumously) that it was OK that I used the logo a few years prior. I also gave them the files of my re-created Colecovision logo.

So yes they authorized my use of the logo, but over 2 years after I built a one-off item.

Facebook has a form for takedown infringment takedown notices which presumably does not invoke the DMCA : https://www.facebook.com/help/440684869305015/ It will take down content it believes is infringing in that the "That use is likely to confuse consumers about the source, endorsement or affiliation of the person’s goods or services". Fortunately it does have an appeals process.

There is support in the caselaw to argue that a wrongful invocation of the DMCA in a takedown notice based on trademark infringement can lead to damages and attorneys fees pursuant to 17 U.S.C. 512(f). Crossfit, Inc. v. Alvies, No. 13-3771 SC, 2014 U.S. Dist. LEXIS 7930, at *6 (N.D. Cal. Jan. 22, 2014)